What Happens to Jointly Owned Real Estate in Pennsylvania Bankruptcy?

Jointly owned real estate can be treated differently from other assets during bankruptcy, depending on the type of joint ownership. If you co-own property with a spouse or someone else and file for bankruptcy, our lawyers can prepare you for what comes next.

If you file for bankruptcy and co-own real estate with your spouse as a tenancy by the entirety (TBE), exemptions protect the co-owned property from being included in the bankruptcy case. Co-owning a property with your spouse is not enough to qualify for TBE exemptions during bankruptcy; you must intentionally elect to mamake it a TBE property when you purchase it. Unmarried co-owners don’t get the same protections during lawsuits, and a debtor’s portion of the property most likely will be included in the real estate case. Spouses who file for bankruptcy together do not receive tenancy by the entirety protections, but they can protect jointly owned real estate by filing a Chapter 13 bankruptcy in Pennsylvania.

Call (215) 701-6519 today to get the free, confidential case review with Young, Marr, Mallis & Associates’ Pennsylvania bankruptcy lawyers.

What Happens to Jointly Owned Real Estate During Bankruptcy in Pennsylvania?

What happens to jointly owned real estate during bankruptcy mostly depends on the type of joint ownership, such as tenancy by the entirety (only available to married couples), joint tenancy, or tenancy in common.

Tenancy by the Entirety

If you file for bankruptcy and own real estate with your spouse, tenancy by the entirety protections can protect your home from seizure. Tenancy by the entirety is a kind of joint property ownership that’s only available to married couples. Under this concept, each spouse owns the entire property, not just a portion of it.

Tenancy by the entirety protections only protect real estate you own with your spouse if one of you files for bankruptcy.

Tenancy by the entirety protection applies exclusively to married couples who purchase the property while they are already married and elect to own it as a tenancy by the entirety instead of tenancy in common. It may also extend to other assets besides real estate if they are also owned as a tenancy by the entirety, such as joint bank accounts and vehicles purchased together.

Joint Tenancy

Joint tenancy is similar to tenancy by the entirety in that co-owners share an undivided interest in the property, and the property passes automatically to the surviving co-owner upon the death of a co-owner.

Joint tenancy differs from tenancy by the entirety in that it does not have specific bankruptcy protections, and is treated similarly to tenancy in common during bankruptcy. This means that each owner has a percentage of ownership in the property, and only the debtor’s percentage is part of the bankruptcy case.

Joint tenancy is a common type of property ownership for married couples, especially if they were unmarried when the house was purchased.

Tenancy in Common

With tenancy in common, each co-owner owns a specific, often unequal, share of the property. The debtor’s portion of the property is part of the bankruptcy estate, but the co-owner’ s is not, unless the bankruptcy trustee forces a sale. If this happens, the co-owner will be compensated for their share of the property. Tenancy in common is not exclusive to unmarried co-owners, and married co-owners can also use this type of property ownership.

What Happens to Jointly Owned Real Estate if You File Joint Bankruptcy?

Tenancy by the entirety doesn’t always protect jointly owned real estate when you file for bankruptcy. Don’t assume that property you own with your spouse is untouchable during joint bankruptcy; always get clarification from our Bensalem, PA bankruptcy lawyers.

No Tenancy by the Entirety Protections

If you file a joint bankruptcy with your spouse, jointly owned property is not protected because of tenancy in the entirety. All jointly owned property and real estate becomes part of the bankruptcy case because both spouses filed the case together.

Risk of Liquidation During Chapter 7

If you file a joint Chapter 7 bankruptcy case with your spouse, jointly owned property could be at risk. You may be able to avoid liquidation by selecting the right exemptions, like the federal homestead exemption.

In 2026, debtors filing for bankruptcy individually can exempt up to $31,575 of home equity from the bankruptcy case, while married couples filing jointly can exempt up to $63,150.

Keep Property with a Chapter 13 Repayment Plan

If you file a joint Chapter 13 bankruptcy case with your spouse, you can keep jointly owned property by proposing a 3- to 5-year repayment plan and sticking to it. As long as you and your spouse stay current with the repayment plan, you shouldn’t have to worry about losing your primary home or other jointly owned real estate.

FAQs About Filing for Bankruptcy with Jointly Owned Real Estate

Can You File for Bankruptcy with Jointly Owned Real Estate?

You can file for bankruptcy with jointly owned real estate, but how that property is affected depends on who you co-own it with, what type of joint ownership you have, if you jointly file for bankruptcy, and what specific bankruptcy chapter you file under.

What is the Best Bankruptcy Chapter to File Under if You Own Joint Property?

If you co-own property and want to minimize the effects of bankruptcy, you should typically file Chapter 13 bankruptcy instead of Chapter 7.

Can a Bankruptcy Trustee Force the Sale of Jointly Owned Real Estate?

The bankruptcy trustee may be able to force the sale of jointly owned real estate, even if a co-owner has more equity in the property than the debtor does, if certain conditions are met. Otherwise, they can only sell the debtor’s share or offer to buy out the co-owner.

Should You File for Joint Bankruptcy with Your Spouse if You Co-Own Property?

If you and your spouse own property together and share debts, filing for joint bankruptcy can help you both wipe the slate clean. However, there are important considerations before filing for joint bankruptcy with your spouse, such as the fact that bankruptcy will affect both spouses’ credit scores and stay on both spouses’ credit reports for years.

What Liquidation Exemptions Apply to Jointly Owned Real Estate During Bankruptcy?

The same federal or state bankruptcy exemptions apply to real estate you own alone or with another person, whether that person is your spouse or not. Debtors may still choose to use the federal homestead exemptions, wildcard exemptions, and other exemptions to protect jointly owned property during a bankruptcy case.

Get Our Help with Your Pennsylvania Bankruptcy Case

Get a free case discussion from Young, Marr, Mallis & Associates by calling our West Chester, PA bankruptcy lawyers at (215) 701-6519.